Medicaid Planning: Converting Assets and Transfers for Fair Market Value in Utah-Kathie Brown Roberts P.C.

Converting Assets from Countable to Exempt/Transfers for Fair Market Value/Medicaid Compliant Annuities.  

In order to qualify financially for Medicaid long term care in Utah,  cash assets in excess of $2000.00 (of a single prospective applicant) may be used to pay off debts such as mortgage on home, vehicle, purchase of funeral plot and services relating to funeral, purchase of life insurance policy to fund funeral arrangement, funeral trust, medical/dental services that are not covered by Medicaid, legal fees.

In Utah, transfers for fair market value by a prospective Medicaid applicant will also not affect eligibility.   An annuity is one example of a transfer for fair market value, however, in Utah an annuity must have all of the following attributes in order to be considered an exempt:  

(i) The annuity is irrevocable and cannot be assigned to another person;

(ii)   The issuing entity is an insurance company or other commercial company that sells annuities as part of the normal course of business;

 (iii) The annuity provides for equal monthly payments and does not provide for a balloon or deferred payment of principal or interest;

(iv) The State Medicaid agency is irrevocably named as the primary beneficiary of the annuity, second only to the surviving spouse or minor or disabled child, not to exceed the amount of benefits paid by Medicaid.

Medicaid compliant annuities are a useful tool in crisis planning in order to convert countable cash resources such as IRAs into an income stream for a community spouse or a disabled child.  Remember that payments from an annuity are considered income.